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Am Law Tech Survey 2010: A Cloudy Forecast

Posted by Ed Shanahan

By Alan Cohen from the November 2010 Issue ofThe American Lawyer

We confess: Interpreting the results of this year's survey of law firm technology departments--our fifteenth--was a somewhat maddening task. On one hand, it was easy to take a glass-half-full view of the results: Capital budgets are ticking back up, not quite to predownturn levels, but more than half of responding firms reported increases over last year. Collaborative technologies like videoconferencing are booming. And the lawyers themselves, spurred on by all the innovative, largely consumer-centric devices hitting the market (think iPhones and Droids), have finally become the tech-friendly users that chief information officers have long been waiting for.

But then the glass-half-empty side kicks in. IT operating budgets haven't quite seen the recovery that capital spending has: Sixty-two percent of responding firms report that outlays are flat, or even down, from 2009. In survey comments and follow-up interviews, technology chiefs reported that pressure to control costs continues, with staffing and salaries in particular taking a hit. And even when the purse strings are loosened, it's largely for technologies like videoconferencing and Microsoft Corporation's SharePoint that cut costs elsewhere, like the travel budget, or boost the productivity of a shrunken workforce. (CIOs from 86 Am Law 200 firms participated in this year's survey.)

"It's no secret that the law firms have laid off a lot of people over the last two years, and the people left are often overwhelmed," says the CIO at an East Coast firm, who asked not to be identified. "So if you can go into a budget meeting and say, 'Here's a project that will save operating expenses'--which can't be spread out over three to five years like capital costs--and help people do their work, that's a project you're going to get through."

Yet not every technology has paid off as hoped. Case in point: cloud computing. While 80 percent of respondents are using these services, which run remotely on a vendor's infrastructure, instead of a firm's, few are using them for critical tasks. And only 29 percent of firms say cloud applications lower costs. "Vendors will tell you it saves money, but the reality is, that's a claim no one should be making," says Daniel Gasparro, executive director of firm operations and CIO at Howrey.

Even the newly tech-savvy lawyers are a mixed blessing, say CIOs. Sure, it's great to see users take a proactive view toward their gadgets and gear. But the more products they want, the more headaches they create for IT. Not every device can be safely, or seamlessly, integrated onto a business network--particularly in a business where security and confidentiality are paramount concerns. Looking back at all those years they tried to engage lawyers with technology, more than one CIO is now thinking: Be careful what you wish for.

Still, the big concern for CIOs continues to be money. Economic recovery or not, technology departments are still feeling the impact of the recent global crisis. Nearly four out of five firms--79 percent--say IT department staffing levels have been adversely impacted by budget cuts, and almost three out of five--56 percent--report salary cuts for remaining staffers. While technology chiefs say they feel that the worst is behind them, the glory days may be behind them, too. "Firms that laid off three people may start to hire one person," says one CIO.